When volatility goes up triple-Bs go down

Some concepts are so blindingly obvious that they quickly become ingrained as accepted market wisdom...

Some concepts are so blindingly obvious that they quickly become ingrained as accepted market wisdoms. Everybody knows, for instance, that lower-grade credit underperforms when volatility picks up. And with equity markets coming under pressure, driven by inflation fears and escalating conflict in the Middle East, and corporate bonds facing a significant increase in event-driven corporate risk, volatility is undoubtedly picking up. Which makes it all the more curious that the best-performing rating category, duration adjusted over the first half of 2006, has been triple-B bonds – more specif...